Business Day

Eating In, Maybe With Carryout

By JANE L. LEVERE

June 10, 2013

Room service has long been part of the convenience and lore of staying at a hotel — Julia Roberts’s and Richard Gere’s characters put it to good use in “Pretty Woman.”

Now, with some hotels eliminating room service because of rising costs and flagging demand, as the New York Hilton announced this month, a range of companies are eager to serve those guests who are not ready to give it up just yet.

Delivery.com, GrubHub and Seamless have been catering to business travelers almost since their founding. They make a simple proposition: by connecting guests with outside restaurants and delis, they can offer a wider variety of food than hotels can, at less cost and with timely delivery. The days of the cold $20 cheeseburger, they argue, are over.

Kenneth Lisi, owner of a hotel management company in Hackettstown, N.J., uses Delivery.com on business trips to order lunch and dinner. “I use it because it’s convenient when I do not have time to go out for lunch, when I have a proposal I am working on or waiting for a conference call from a client,” he said.

Brett Africk, a Syracuse-based salesman for a software company, said he also used GrubHub and Eat24.com on business trips. “I don’t always like going out and dining alone,” he said. “A lot of times I order delivery and eat in front of the TV or while doing work at night.”

Chicago-based GrubHub provides menus from more than 20,000 restaurants in more than 500 cities in the United States, while New York-based Seamless offers menus from more than 12,000 restaurants in many American cities and in London. In a sign of a consolidating industry, the two companies announced last month that they planned to merge.

Delivery.com, based in New York, works with 10,000 merchants — a large majority of them restaurants — in 50 cities and offers to deliver groceries and alcoholic beverages in addition to food. Eat24.com, based in San Bruno, Calif., works with more than 20,000 restaurants in more than 1,000 cities.

The companies operate in a similar fashion. Customers give their location, via the Internet or smartphone app; the company then provides menus from all restaurants serving that address. All companies post ratings of restaurants, while some even cite popular dishes; Eat24.com and Delivery.com also provide special benefits to frequent customers.

The food-ordering companies receive commissions from restaurants for referrals. Seamless — which was founded by a lawyer looking for an easy way to order dinner while working on client business — also provides a billing and expense management service to its corporate customers, which include law firms and financial and professional services companies, and charges a processing fee for its use.

Savings generated by ordering online can be significant. Dan Gellert, chief executive of GateGuru, an app for air travelers, is a customer of Seamless and Delivery.com, usually for dinner on business trips. He estimated that ordering meals online saved him 30 to 50 percent off hotel room service, which he said was often priced too high. “I have a tighter budget than maybe my corporate brethren,” he said.

While the companies did not quantify how much of their business came from hotel guests, they all said it was a growing market and represented a significant opportunity.

Manuel Tello delivered a Delivery.com order to Kenneth Lisi, right, a guest at the Seton Hotel in Manhattan.

Hiroko Masuike / The New York Times

“Two years ago I might have received one or two inquiries from hotels in a six-month period, while in the past six months I’ve seen a dramatic increase in the number of conversations I’ve had with hotels,” said Nicholas Worswick, corporate general manager at Seamless. He added that he was working with a boutique hotel in Washington to provide in-room dining for its guests.

Delivery.com and a hotel key card company ran a trial in 2011 at 20 hotels in the United States that Jed Kleckner, chief executive of Delivery.com, said generated “several hundreds of orders.”

The shift from room service will only increase, analysts say. John Fox, senior vice president of PKF Consulting, called room service “a losing proposition in most hotels.”

“Few hotels, particularly in big urban centers, can make a profit on it,” Mr. Fox said. “It’s very labor-intensive and difficult to execute well and easily. At the end of the day, the question is how many fewer rooms a hotel will sell if it doesn’t have room service than if it does.”

A survey conducted from 2007 to 2012 by PKF Hospitality Research of 430 full-service hotels across the United States found that annual room service revenue per guest room dropped to $866 in 2012, from $1,157 in 2007.

Another factor in the declining popularity of room service, said Bjorn Hanson, divisional dean of the Preston Robert Tisch Center for Hospitality, Tourism and Sports Management at New York University, is that younger travelers tend not to use it.

“They would much rather take their computers, sit and work in the lobby while having a convenient breakfast,” he said. “They don’t want to wait for a room-service breakfast, served by a waiter, on a white tablecloth.”

Smartphone apps have increased the use of delivery companies among younger travelers. Henry Harteveldt, an analyst for Hudson Crossing, a travel industry consulting company, said these travelers were “more used to ordering things online and more likely to be engaged with their smartphones.”

Apps are available for local food-delivery services in American cities, as well as in destinations overseas, said Miriam Moscovici, director of emerging technologies for BCD Travel, a travel management company.

Perhaps the biggest prize for menu companies is to have a business tie with hotels. Delivery.com and Seamless are working on ways to add charges for orders from hotel guests to their hotel bills, which would make their services even more attractive to business travelers who must submit expense reports.

But that will take some time. Mr. Hanson of N.Y.U. predicted that the widespread ability to charge outside meals to hotel guest accounts was “more than one year away.”

“Luxury and full-service hotels must find ways to make their food and beverage model less costly to operate,” he said.